Our debt will force us to bow to China
It was interesting this morning to watch President Hu of China as he was welcomed to the United States with a 21-gun salute and an honor guard. He looked to me like an Emperor reviewing his serfs, the lowly Americans who must bow before the Chinese lenders. We owe China over $1 trillion as they bought our country at bargain basement prices. They manufacture and sell us goods that were once produced in our closed factories. Some of the technology used in Chinese factories was hacked or stolen from the U.S. government and American corporations. Now products essential to our national defense as well as the goods we use every day are made in China. This includes clothing, auto parts, computer chips, electronic devices, scientific instruments, and even dog food.
Last week, I made a presentation to a patriots' group here in Pennsylvania. In that presentation, I mentioned that as a child I would take my savings bond stamp book to school with some money and buy a stamp to put in the book. When the book was full, I received a savings bond. When I started working, I used payroll deductions to purchase more bonds. That way I could put a little away out of each paycheck and when there was enough money, purchase a savings bond. It paid a decent return and it was backed by the full faith of the treasury. I was happy with those investments until I discovered mutual funds and stocks. Over the years my interest in savings bonds waned as I could get a better return in the stock market.
Recently, I realized that savings bonds offer a low cost alternative to foreign investment in our country. The bonds pay about the same rate as five-year treasuries. The electronic versions of these bonds can be cashed in at face value anytime, making them an alternative to Certificates of Deposits (CDs) issued by banks. The government's sale of treasuries did not go well last week as China and other countries bought less than we expected. They are concerned about inflation, the national debt and the declining value of the dollar. If Americans bought bonds, we could reduce the dependence on other nations funding our debt.
In my presentation, I suggested that we need to declare war on the debt using the modern equivalent of War or Victory Bonds to fund the government. With these words, the room went quiet. War Bonds were sold in campaigns led by movie stars and other distinguished people. The newsreels shown every Saturday at the cinema had a War Bond commercial. It was obvious that I had touched a funny bone with the audience as I was getting an unusually quiet reaction to my comment. I walked up to a man and asked him if he had $1,000 would he buy U.S. savings bonds? He responded that he would not. I asked the other participants if they would by a U.S. bond and the answer was silence. Obviously no wanted to buy them.
This shocked me. Has our country fallen so far that even citizens will not invest in it? We had a room full of patriots who have gone to protests in Washington and Harrisburg, yet they will not invest in the U.S. government. I understand their concerns. It is clear that our nation is bankrupt! Many of us do not want the debt ceiling raised any higher as limiting the debt could result in an immediate decline in spending and downsizing of the civil service. It might result in a default or two but it will not be catastrophic. I don't believe President Obama and other politicians who say that failing to raise the debt limit will result in the default of American obligations and the destruction of the world as we know it. I believe this is hyperbole designed to scare us into accepting more debt than this nation can ever repay. In my opinion we should reject further investments from sovereign nations. We can no longer afford to be puppets on a string to foreign governments. China has the ear of the President and with recent demonstrations of their enhanced military capability, has shown Obama (the Manchurian Candidate) that he needs to kowtow to their "suggestions". Our foreign policy as it relates to Taiwan and Asia has also changed since the Bush era. Will we defend Taiwan in the face of new Chinese missiles that can sink our carriers? I say that Obama will whimper before President Hu just as Prime Ministers Baldwin and Chamberlain capitulated to Hitler prior to World War II.
Our country has on several occasions fought to restore freedom to other nations. In the second Sino Japanese War (1937 to 1945) the American Volunteer Group and the Flying Tigers defended China when they were invaded by Japan. Our soldiers and airmen died to protect the Chinese. After World War II, America rebuilt countries when no one else would. In my presentation last Friday, I showed pictures of Nagasaki Japan rebuilt with US dollars and compared them to pictures of Detroit. Nagasaki was a gleaming city of bright buildings, clean streets and a well-fed population. Detroit looked like a war zone! Rundown buildings, vacant and burned-out houses with copper piping stripped from the buildings. As I write this, we are nation building in Iraq and Afghanistan, while our own cities languish in poverty. The buildings in Detroit, Cleveland and Buffalo stand derelict as a reminder of our former prosperity.
Those nations that we defended and rebuilt with US dollars (Germany, Japan, Italy, France, etc.) prosper. China is a manufacturing powerhouse because our corporations opened factories in China to employ their workers while shutting down factories here in America. Since 2001, over 42,000 American factories were shuttered. (http://www.prospect.org/cs/articles?article=the_plight_of_american_manufacturing). It was impossible to make a profit here in the United States with outdated equipment, excessive regulations and expensive labor. Now we must beg foreign governments for money to support our deficit. This must stop and it must stop now.
It is time for Americans to invest in America, just as we did in the past. If we must buy "War on the Debt" bonds to stop mortgaging our future, then I will be willing to do so. We also need to downsize the government by at least forty percent. This is the reduction necessary to balance the budget. We must do this now before it is too late to stop our downward spiral. Our politicians must realize that We The People will not stand and bow to China or any other country. We revolted against the British in 1776 over the Stamp Tax. In 2012, we will vote out politicians who continue to spend our nation into oblivion.
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© 2011 Gordon Smith All Rights Reserved